Consultant Insight: What the US infrastructure plan means to the air cargo market

After much anticipation, U.S. President Joe Biden’s infrastructure plan was made public this week. At $2 trillion in spending, it’s an ambitious plan that not only includes upgrading the U.S.’ transportation network but also its electrical grid, clean drinking water, affordable housing, upgrading hospitals, schools and childcare facilities, revitalizing U.S. manufacturing and secure U.S. supply chains. [caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] The plan earmarks $25 billion for spending on airports, funding for the Airport Improvement Program , upgrades to Federal Aviation Administration (FAA) assets and a new program to support terminal renovations and multimodal connections. According to the plan’s fact sheet published by the White House, “the United States built modern aviation, but our airports lag far behind our competitors. According to some rankings, no U.S. airports rank in the top 25 of airports worldwide.” Some rankings do feature U.S. airports among the world’s top 25, including from the trade association of the world’s top airports, Airports Council International (ACI). U.S. airports in ACI’s 2019/Q1 2020 ranking of passenger airports include: No. 1 Atlanta (ATL), No. 3 Los Angeles (LAX), No. 6 Chicago (ORD), No. 10 Dallas/Fort Worth (DFW), No. 16 Denver (DEN) and No. 20 New York (JFK). The American Society of Civil Engineers (ASCE) noted in its annual U.S. infrastructure report card that prior to the COVID-19 pandemic, U.S. airports were faced with capacity challenges. Over a two-year period, passengers increased from 964.7 million to 1.2 billion per year, but flight service only increased from 9.7 million to 10.2 million flights per year, contributing in part to a total of nearly 96 million delay minutes for airline passengers in 2019. Sadly, there seems to be no mention of air cargo in either President Biden’s infrastructure plan nor in the ASCE aviation report card and that’s probably because passengers typically make up the bulk of revenue for many airports. However, last year the importance of air cargo rose as many airports turned into passenger ghost towns because of travel restrictions during the COVID-19 pandemic. A look at ACI’s ranking of cargo airports finds Memphis (MEM), Louisville (SDF) and Anchorage (ANC) in the top ten, in terms of tonnage, ranked at No. 3, No. 4 and No. 6, respectively, with Miami (MIA), LAX and ORD also in the top 20, ranked at No. 12, No. 13 and No. 18, respectively. According to the U.S. Bureau of Transportation Statistics, domestic cargo-revenue ton miles that U.S. airlines transported in 2020 increased by 13.9% year over year. A cargo-revenue ton mile is a profitability metric measuring how much revenue a company makes per ton of freight transported one mile, according to Investopedia , so the increase may be misleading given that rates were much higher YoY in 2020 due to reduced capacity. Still, a look at previous years shows positive growth as well. In 2019, U.S. domestic cargo-revenue ton miles increased 2.78%, in 2018 it increased 5.47%, and in 2017 it increased 10.04%. What’s driving this yearly growth is probably e-commerce. FedEx and UPS have invested heavily in their air hubs in MEM and Indianapolis (IND) in FedEx’s case, and SDF in UPS’, as well as other secondary air hubs throughout the U.S. such as DFW, San Bernardino (SBD), Chicago Rockford (RFD) and more. Amazon’s expanding domestic air network is also well worth a call-out in regard to airport infrastructure investments. Since announcing it planned to provide same day/next day delivery for its Prime Members in 2019, Amazon has expanded its air network beyond larger airports to such airports as Toledo (TOL), Lakeland Linder Airport (LAL) and RFD that are close to their fulfillment facilities. As the U.S. moves beyond the COVID-19 pandemic, air cargo will be an important part of airports’ considerations when investing and upgrading airport infrastructure thanks to the growth in e-commerce. Speed in last-mile delivery is important and air transport is a part of this equation along with trucking and rail.

Consultant Insight: What the US infrastructure plan means to the air cargo market

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